Gary Cohn Says Fed Should Be Done Raising Rates

Episode Summary

Executive Summary: Gary Cohn traces his path from a short stint at U.S. Steel to commodities trading, Goldman Sachs leadership, and serving as Trump’s NEC director. He emphasizes crisis management, building businesses, and the tax code overhaul as his public-sector highlight, while arguing today’s Fed, fiscal spending, AI, blockchain, and cyber risks demand a longer-term, more adaptive policy and business mindset.

Main Topics: Career origin in commodities trading (Priority: 5/5): Cohn explains how an internship, the Hunt brothers’ silver/gold episode, and early arbitrage trading pulled him from local jobs into the Comex and ultimately finance. Goldman Sachs growth and internal business-building (Priority: 5/5): He describes rising through Goldman by building and integrating commodities, emerging markets, mortgages, equities, and securities businesses, learning management and risk across asset classes. Crisis management philosophy (Priority: 5/5): Cohn frames his role as owning problems, gathering facts, verifying both sides, communicating truthfully, and aiming for the softest landing when things go wrong. Trump White House and the Tax Cuts and Jobs Act (Priority: 5/5): He recounts assembling a strong NEC team, negotiating tax reform through the House, Senate, and White House, and defending the TCJA as pro-growth rather than a giveaway to the rich. Fed policy, rates, and fiscal stimulus (Priority: 4/5): Cohn argues the Fed tightened too late, may be overtightening, and is fighting against persistent government spending that keeps labor demand and inflation pressures alive. Technology, AI, blockchain, and cybersecurity (Priority: 4/5): He sees AI as a productivity and monitoring tool, blockchain as the future of settlement, and cyber defense as an underinvested national priority. Personal resilience and dyslexia (Priority: 3/5): Cohn discusses how severe dyslexia shaped his confidence, his approach to failure, and his preference for logical, technical reading over traditional books.

Key Arguments: Crisis handling starts with ownership: a leader must accept responsibility, get the facts, and communicate honestly before trying to solve the issue. Goldman’s success came from building client-facing businesses across asset classes and reorganizing desks around synergies, not isolated silos. The TCJA broadened the tax base, lowered rates, repatriated offshore capital, and improved incentives for U.S. investment and hiring. Eliminating SALT was painful politically, but he argues it was necessary to offset rate cuts and broaden the base. Pass-through/LLC relief was intended to support small businesses while avoiding arbitrage that would push firms into corporate form purely for tax reasons. The Fed’s tightening is being offset by large fiscal programs, so higher rates may not cool the economy as much as expected. AI will likely displace some tasks but create larger, more efficient organizations and better regulatory/cyber monitoring. Blockchain could reduce settlement friction and title/ownership confusion by creating a more reliable transaction record.

Data Points: U.S. Steel job duration: Summer of 1982 to fall of 1982 - Cohn says his first job after college was very short-lived. College graduation year: 1982 - He graduated college before taking the U.S. Steel job. Gold arbitrage price spread: $5+ disparities - He describes large New York/Chicago gold price gaps during the Hunt brothers era. Month of arbitrage trading: About a month - He traded gold arbitrage after learning from commodity traders. Comex seat cost: $50,000 - He recalls the approximate cost of buying a seat on the exchange in 1982. Floor trading tenure: Until about 1990 - He says he stayed on the Comex floor through the end of the decade. Goldman career length: 25 years - He spent roughly 25 years at Goldman Sachs before moving to government. Goldman public filing scale: Late 1990s S-1 revenue smaller than a current quarter - He uses the IPO filing to show how much Goldman grew over time. House vote threshold: 235 votes - He cites the number needed to pass legislation through the House. Senate vote threshold: 60 votes - He notes the normal Senate threshold for legislation. TCJA signed: December 22, 2017 at 12 noon - He gives the signing time for the tax bill. Tax reform work start: December 2016 - He says planning began immediately after agreeing to join the administration. Time spent on tax reform: About 365 days - He says the issue dominated nearly a full year of his attention. Repatriation payment period: 5 years - He describes the deemed repatriation tax as payable over five years. Current federal debt: $33 trillion - He references the size of U.S. debt when discussing maturities and borrowing. Fed tightening start: March 2022 - He locates the start of the current tightening cycle. Suggested remaining Fed hikes: 1 more 25 bps hike or none - He argues the Fed may already have done enough. COVID CARES-related fiscal packages: $2.2T, $800–900B, and another $800–900B - He cites multiple stimulus rounds as part of ongoing fiscal support.

Pivotal Quotes: "I always believe you have to own the problem. Ownership is 90% of the battle." — Gary Cohn: His crisis-management philosophy on how leaders should respond when something goes wrong. "Lower the rate, broaden the base." — Gary Cohn: He summarizes the tax-reform principle behind the TCJA. "I think you've done enough." — Gary Cohn: What he says he would tell Fed Chair Jerome Powell about the current tightening cycle.

Implications: Listeners get a detailed playbook for crisis leadership, market structure, and policy execution. Cohn’s views suggest a more pro-growth tax stance, caution on Fed tightening, and major upside from AI/blockchain if paired with stronger cyber defenses.